Is Tesla scrapping its £25,000 entry-level car?

Tesla has reportedly scrapped its entry-level model amid growing competition from budget Chinese carmakers, and will shift its focus on self-driving taxis instead. 

Founder Elon Musk has long spoken of a low-cost model to bring Tesla ownership to the masses, but now the plan has been shelved according to Reuters.

The news agency cites internal company messages it has seen and three sources familiar with the matter all confirming the cheaper model has been abandoned.

Musk told investors as recently as January this year that production of the entry-level car would commence at its Texas factory in the second half of 2025. Moreover, the car was a key component of Wall Street analysts' sales forecasts which call for sales to rise to 4.2 million by 2028 – up from 1.8 million in 2023. 

Dubbed the 'Model 2', the car was intended to sit below the Model 3 with a starting price of around £25,000. It would have placed Tesla in the key battleground of affordable EVs currently dominated by Chinese carmakers.

Reuters added Tesla still intends to use the platform intended to underpin the £25,000 model for self-driving taxis – another production dream of Musk's.

Elon Musk denied the report, posting on X: "Reuters is lying (again)."